Treasuries Advance After Disappointing Jobs Number, Stocks End Lower

(Bond Market Wrapup for July 6th, 2012) Treasuries extended gains for the second straight day as investors increased bets that the Federal Reserve will resort to a third round of quantitative easing to boost the tepid job market.

Ten year Treasuries gained after a US Labor department report showed the US economy made scant progress toward reducing unemployment, adding only 80,000 jobs in June against a consensus estimate of 100,000. Hiring in the second quarter dropped sharply to 75,000 a month compared to 226,000 in the first quarter. The benchmark 10-year yield dropped five basis points, or 0.05 percentage points, to 1.54 percent in late afternoon trading, New York time. Yield on 10-year notes dropped 10 basis points this week, the most since the week of June 1. The yield on 30-year Treasury Bonds fell six basis points to 2.66 percent even as the unemployment rate remained unchanged at 8.2 percent.

10 Year Treasury Yield 1 Month Chart

Bond Funds were also up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) added $1.17, or 0.93 percent, to close at $127.06, while the Vanguard Total Bond Market ETF (BND) gained 8 cents, or 0.09 percent to close at $84.57 for the week.

TLT 1 Month Chart

US stocks closed lower Friday with the S&P 500 and the Dow Industrials suffering weekly losses after a US Labor Department report showed weaker-than-expected job growth in June. The Dow Jones Industrial Average (DJIA) slipped 124.20 points, or 0.96 percent, to 12,772.47 in a volatile trading day, off 0.8 percent for the week. Within the blue-chip index, 25 of the 30 components retreated led by IBM (IBM), Hewlett-Packard (HPQ) and Caterpillar (CAT). McDonald’s Corp (MCD) and Wal-Mart Stores (WMT) were among the gainers.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) lost 12.90 points, or 0.9 percent, to 1354.68, off 0.6 percent for the week and down for two out of the last three weeks. The NASDAQ Composite Index (COMP) slipped 38.79 points, or 1.3 percent, 2937.33, up 0.1 percent for the week and posting its fifth straight week of gains.

For every stock advancing, more than two declined on the NYSE.
Oil prices for August delivery dropped $2.77 to close at $84.45 a barrel.
Gold futures for August delivery fell $30.50 to $1,578.90 an ounce.